Think of the web only as a new channel – a different way of putting products and services in front of customers – and you miss the threat and the promise of the Internet, which is that it will utterly change how you do business.
Reasons to start an internet Business
Need convincing that the Web is the place for your business to be? Here are 10 reasons why you have to be online:
- It’s cheap. There is no more inexpensive way to open a business than to launch a web site. While you could spend up to many millions of dollars to get started, low-budget web sites (started with as little as $100) remain viable businesses.
- You cut your order fulfilment costs. Handling orders by phone is expensive. Ditto for mail orders. There’s no more efficient–cheap, fast, accurate–way to process orders than via a web site.
- Your catalogue is always current. A print catalogue can cost big bucks, and nobody wants to order a reprint just to change one price or to correct a few typos. A Web site can be updated in minutes.
- High printing and mailing costs are history. Your customers can download any information you want them to have from your web site. Sure, you’ll still want to print some materials, but lots can be distributed via the web.
- You cut staffing costs. A web site can be a low-manpower operation.
- You can stay open 24 hours daily. And you’ll still get your sleep because your site will be open even when your eyes are closed.
- You’re in front of a global audience. Watch your site log, and you’ll see visitors streaming in from Australia, New Zealand, Japan, South Africa – wherever there are computers and phone lines.
- There are no city permits and no hassles. It could change, but in most parts of the country, small web businesses can be run without permits and with little government involvement. As you expand and add employees, you’ll start to bump into laws and regulations, but it’s certainly nice to be able to kick off a business without first filling out reams of city and state forms.
- There are no angry customers in your face. You can’t ignore unhappy customers in any business; in fact, how well you deliver customer service will go far toward determining how successful you are. But at least with a web business you’ll never have to stand eyeball-to-eyeball with a screamer.
- It’s easy to get your message out. Between your web site and your smart use of e-mail, you’ll have complete control over when and how your message goes out. You can’t beat a web site for its immediacy, and when a site is done well, it’s hard to top its ability to grab and hold the attention of potential customers.
Domains and Hosting
Choosing a Website Host and Domain Names
With your website designed, you need a place to stow it so that visitors can access it –and you have hundreds of choices. Many hosts are free, and few cost more than a few hundred Rands per month. Truth is, setting up your own host – a dedicated computer that’s permanently wired into the net – wastes money and time and, for most small businesses, is a bad idea. Better to outsource hosting to those who specialise in it.
When picking a host, you first and foremost want to know if a host can handle e-commerce activities. Some of the most barebones companies simply aren’t equipped.
Other criteria that are important to most users: setup and monthly fees; amount of available storage space (you want at least 10 to 25MB to start as well as the option to add more space as your needs expand); and connection speed (some very low-budget hosts rely on slow 56K modems, while most business-level hosts have high-speed connections.
Comparing hosts is difficult, so a good policy is to quietly set up an account and test the host – kick the tyres, so to speak – for several weeks before announcing your presence to the world.
Isn’t that expensive?
Yes, but more expensive – and embarrassing – is to make a big push for traffic, only to have your host drop the ball and leave you with annoyed visitors who can’t quite make it in. Better to know your host is operating smoothly before inviting guests to the party.
Master of your domain
Before setting up your site, you also need to stake out your domain name. There’s wide agreement that nothing matters as much as a good name. Yet who would have thought Amazon was one? What most matters in a name is that it’s easy to spell and easy to remember.
For my money, that’s an argument against using a catchy name with an unorthodox country code suffix. Most computer users automatically type “co.za” “com”, or “net”. Throw a weird ending at them, and you may lose them. So I would recommend a clunky name with a “com” or “net” ending over a catchy name with an unorthodox ending.
Search engine listing
Just about every search engine provides tools for easy registration of new sites. Just look for an “Add URL” or “Add Site” button, and then follow the directions (ordinarily no more complex than typing in the address and hitting “Send”).
There are hundreds of search engines to choose from. But there’s little value in being on an index no one uses, which is why e-tailers should focus on a handful of high-traffic engines. The leading search destination is Google.
What will lure visitors to a site? Winning visitors becomes a matter of creative, persistent marketing. And the good news is that it’s still the little things that will bring plenty of traffic your way. There are fundamental steps that too many businesses neglect. For instance?
“You should always put your URL and a reason to visit your Website on your business cards”, says Larry Chase, publisher of Web Digest for Marketers, a weekly e-mail newsletter that delivers short reviews of marketing-oriented sites. “I call this cyberbait. For example, you should mention what people will get when they visit the site, such as a newsletter or a list of ‘Top 10 Tips’. That substantially increases visitors and eventually customers or subscribers.”
An e-mail signature is an especially powerful – and absolutely free – tool. Create a signature with a link to your website in it and have it automatically attached to every one of your outgoing e-mails. If your e-mail recipients click on the link, they’ll be taken to your site.
It only takes a few seconds to create an e-mail signature, and it’ll bring in visitors to your site every day. Another low-cost traffic builder: “Get active in online discussion groups and chats, and, where appropriate, give out your URL,” says Shannon Kinnard, author of Marketing with E-Mail.
Sell organic products? Scout out the many groups that focus on organic food and get active. A good place to find groups is at Google Groups which archives discussion lists. Getting active in these groups spreads the word about you and your site and you’ll get traffic coming to you. Another big-time traffic builder for any website that retails is posting items for sale on the major auction sites, such as Bid or Buy.
Renew domain names each year
Many people do not realise that domain names (also known as URLs) must be renewed each year. If you failed to renew the domain this could be the reason that someone else has your domain address.
When registering a new domain name ensure that you have registered domain names that not only incorporate your trading names, but also your trade marks. Once you have registered your domain names do not forget to renew them every year. Failure to pay the annual renewal fee can result in your domain names being deleted.
What happens if a domain registration is allowed to expire?
One week into the redemption period, the expired domain is put into a 10-day domain auction, allowing prospective registrants to bid on the domain. The winner of the auction obtains the domain registration ownership two weeks after the auction end date if the original owner fails to renew the domain by the end of the redemption period?
Is there a grace period?
The redemption grace period allows the name to be held for a 30-day period during which the original domain registrant may retrieve the name (for an additional fee) by contacting the domain registrar.
Don’t forget to register the domain name in your own name
Be careful to make sure that your domain name is registered in your own name and not under the web designer or technical support person’s details. Some service providers use their own contact details and this can cause problems later if you need to move the domain or a dispute arises on the right of use for the domain name.
Do a whois on a domain name to ensure that it hasn’t been registered. Then look for the date of the domain name.
There are other situations that can lead to a domain name dispute:
- Typosquatting: If a person manipulates the spelling of a name and registers it. This is usually done when playing on popular brand names. E.g. www.planetexcercise.co.za could be registered as www.planetxcercise.co.za
- Cybersquatting: Sometimes a person registers a domain name of a well-known company before they have had a chance to register it. In bad faith, they then sell it back to the rightful owner.
How to deal with disputes
- ICANN handle dispute proceeding for .com, .org and .net. You can find a list of ICANN dispute resolution bodies at the ICANN website here.
- The .co.za domain in South Africa is Uniform. Visit their web site at http://co.za for information with regard to proceeding with a dispute.
- The ZA Domain Name Dispute Resolution Regulations (ZADRR) permits complainants to file a dispute with a dispute resolution service provider for .co.za domains, specifying, the domain name in question; the respondent or holder of the domain name; the registrar or registry with whom the domain name was registered and the grounds for the dispute. Such grounds include reasons why the domain name registration constitutes an abusive or offensive registration.
- ZADRR complaint is much faster than normal litigation in the courts. A domain name case filed with the South African Institute of Intellectual Property Law (SAIIPL) is normally concluded within two months, using on-line procedures
Providing a Service
Providing great customer service
E-tailers used to be innocents who thought that with web-based retailing, all customer service would be a thing of the past with the entire sales and service process becoming neatly (and oh, so inexpensively) automated. Ha! If there’s a mantra for e-commerce players, it’s this: Customers may be virtual, but their money is real.
How to provide the best online service possible? Just follow the leaders:
- Anticipate questions. Many e-tailers anticipate questions and then answer them in their FAQs. This will save you and your customer’s time. Of course, sometimes customers will e-mail you with questions, and this can be a good thing. Get lots of e-mail complaining about a certain feature that the customer has simply misunderstood or bemoaning the lack of a particular product that you know is in stock, and you are learning important things about how your site is failing to communicate to visitors.
- Stay in touch. At Hewlett Packard’s hpshopping.com, every customer is asked if he would recommend hp-shopping to friends, and 88% say they would. But the small percentages who say “no” aren’t forgotten. Just contacting them alone is often enough to win them back.
- Respond quickly. The web is an instant medium – except when it comes to getting responses from many businesses that seem to route incoming e-mail into a folder labelled “Ignore Forever.” Smart e-tailers know better, however. With a small staff, you might find a 24-hour standard to be enough of a challenge. But monitor customers. If they demand a faster response, somehow you have to find a way to meet their needs.
- Hold their hands. Online, not every customer knows how to shop, and you have to be ready to help them buy. No brick-and-mortar retailer has to teach customers how to buy, but online, that remains a thorny problem. Every day thousands of shoppers log on for the first time, and these newbie’s genuinely crave handholding as they make purchases. Understand that and be ready to help. Be patient, too.
- Use cut and paste. Canned responses – cut-and-paste scripts – are used by all the leading sites, which track questions, hunt for the most asked, and produce templates for their representatives. You can do likewise. As you answer customer questions, file away your responses. Odds are, you’ll be asked the same question within the week, and it’s a great labour saver to have an answer ready.
- Stay sensitive. A worry with e-mail: It’s easy to seem cold and unresponsive in the formality of the written word. Read and re-read your responses before they go out. You want to be – and appear–interested in the customer’s issues and eager to find solutions.
- Offer choices. It’s important that you offer a variety of choices that customers can use to contact you, such as e-mail and phone. The easier the online shopping experience, the more likely the customer will come back for more.
These steps will get you started delivering better customer service, but they’re not enough. Successful entrepreneurs say that the only way to do online service right is to have the right attitude, really believe the customer is king, and make sure that every one of their customer service reps know it.
Many fail on this score, but when you’ve made customer service your top and continuing priority, success is within reach.
Here’s the blunt truth about e-commerce: Most of what you want to know will not be in books or even in magazines and newspapers. This industry is exploding so fast that the only medium that is successfully tracking developments is the Web itself.
When you want to know more, or need answers to questions, log onto the Web and go searching. The information you crave is rarely more than a few mouse clicks away.
Showcasing your Brand
How to create awareness and generate traffic to an online business
Regardless of the theme of a website (such as a niche site aimed at sufferers of diabetics), the concept of creating awareness for any website follows the same principals.
Offer something that no one else does or can. To achieve this you will have to visit similar social networks do as much research into what they offer and then determine how you can be different.
Viral marketing campaigns
Viral marketing offers advertisers a way to reach a large audience at a relatively low cost to other marketing channels, but it is very dependant on engaging with people and grabbing their attention.
How does a viral campaign work?
Viral marketing and viral advertising refer to techniques that use pre-existing social networks to produce increases in brand awareness. To explain in non-technical language, viral marketing is the same as “word-of-mouth advertising or leveraging the media” in off online marketing campaigns.
- Viral marketing is powerful tool and these are a few of the strategies that are used:
- Give away products or services. “Free” is the one of the most powerful words in a viral vocabulary – free e-mail services, free information and so on.
- Launch regular Podcasts that are free to subscribe to that offer regular and useful information and help to your readers.
- Offer a prize in a competition in return for having access to the entrant’s details
- Referral Incentives using Email / SMS messaging platforms
- You Tube Videos can drive a huge amount of visitors to the website
- Create social networking applications on FaceBook, Twitter and MySpace
- Other Marketing Methods
- Take advantage of others’ resources
The most creative viral marketing plans use others’ resources to get the word out there. Affiliate programs, for example, place text or graphic links on others’ websites.
Buzz marketing can be powerful
Buzz marketing is another technique that can be affectively used to make each encounter with a browser appears to be a unique, spontaneous personal exchange of information instead of a calculated marketing pitch. Buzz campaigns are run through chat rooms in order to reach a target audience; personal blogs are another popular vehicle for electronic buzz marketing campaigns
How to generate revenue and content
Finding good content for your site
Sharing content online is one of the fastest growing trends on the worldwide web. RSS (Really Simple Syndication) is a free content feed system that provides headlines, blurbs and links to the most recently published articles on this website.
With the FIFA World Cup knocking on the door, there is no storage of topics to cover. Consider hiring a writer to help you write and prepare the content. If you want more that RSS content then review web sites which offer a similar subject to yours, but larger in user base and overall site traffic.
With clever search engine use, you can easily find out what methods they are using to syndicate their content. You can use this information to develop your own plan of attack.
How to generate revenue
If you own a website, there’s a variety of things you can do to generate extra income to run the site.
One of the easiest ways to earn money from your website is to add Google AdSense to the site. Sign up for an account, and add it to your website where you want AdSense to appear. How Google AdSense generates earnings is that it places Google advertisers on your site and you simply take a percentage of the click-through revenues. Visit their website for full details.
Banner advertising is one of the most popular and effective ways to maximise profits. It is the same as selling advertising space on your website. If you want to make additional money, sell sponsor ads and place them is a special section or towards the top of your website for the most exposure. Many businesses will pay for leads/sales that you direct to their sites as well.
Selling products or services through the website can generate good income. Of course, they should be related to your target audience. If you go this route, you will have to arrange that the have the facility to securely accept credit card payments directly from your website.
Fee based membership websites are those that require users to pay for a membership in order to access content. This only works if you have content that people want or must have.
According to the Department of Sport and Recreation, a recent study on sport sponsorship in South Africa shows that the industry is vibrant and growing. Sponsors continue to view soccer, rugby and cricket as those that offer the best exposure value.
To find sponsorship find out who are the decision makers for the companies you want to approach and either call or even better get actual “face” time with them. Identify the companies that would be most interested in supporting your type of business. Seek companies committed to youth ventures (especially in your community) as well as companies that might have an interest in the business you are developing.
Getting the help you need to write a business plan
Most website publishers, especially those who are new to the industry, create a website without a business plan. The golden rule, that one should never start a business without a plan, still applies. The reason − a business plan gives you focus. If you lose focus, you can end up with a website that is too generalised for the target market.
When you write down your vision and goals for the business plan, make sure that you also outline steps to reach them. A business plan helps you to manage the finances better as well. The business plan should include your start-up costs, as well as your monthly and yearly expenses.
You can get help in order to write a business plan, but don’t get someone to write it for you. Creating your business plan is an important exercise for you to go through because it forces you to think about many issues you have to face starting a business of this nature, i.e. position in the market, competition, development and maintenance, technology, pricing, risks you may face, and ultimately your profitability.
How much capital is needed to set up an online website?
The cost of developing a website, whether it be R3 500 or R20 000, is not a sensible way to choose a web developer. It doesn’t matter if the developer is small one-man operation or a huge established developer. What matters is that the developer provides your business what you need and that the site will easily adjust and keep abreast of rapidly changing developments in the world of IT in a cost effective way.
The process of web site development can be divided into different life cycles:
- Spec Phase
- Testing and Delivery
Step 1: Planning
Many things need to be taken into consideration when designing a site.
- Decide what is the purpose of the site? Do you want to provide information, promote a service, sell a product, in your case, it would be to sell a product.
- What are your goals? What do you hope to achieve by building this web site? Common goals include the sharing of information, making money or a reservation service and so on.
- Decide on the target audience. Do this by gathering information such as age, sex educational background and interests – this will help to choose the best design style for your site.
- What kind of information will the audience be looking for on your site? Are they looking for specific products?
During this phase, the web designer will recommend what technologies should be implemented. Elements such as interactive forms, ecommerce, flash, etc. are discussed when planning your web site.
Remember, you don’t want to find later on that because your research and more importantly, the specs given to the web designer were inadequate, you have to find more money to improve the site because you didn’t consider certain growth areas right in the beginning.
Step 2: Spec phase
The most important phase of web development. The Spec Phase is used for the technical discipline of organising website content. This provides a guide as to what features you need on the site, and is essential to developing a consistent, easy to understand navigational system.
Think about menus you need and whether you need ecommerce applications, video, pod casts, blogs or forums. The Spec Phase is similar to the information an architect needs to gather in order to draw to build a house or office block.
Step 3: Design
This is the stage where you determine the look and feel of the site. Target audience is one of the key factors that must be carefully thought out because the design is what the browser will see. This is where you would incorporate elements such as the company logo or colours to help strengthen the identity of the company on the web site. It must be user friendly and easy to follow.
Step 4: Development
The development stage looks at the back end – the engine of the website. This is the stage where all of the features and functionality are pulled together and made to work.
The development will also apply to design of the site (fonts, colours, overall design theme and other elements) to ensure the ‘front end’ – the component of the site that is visible to the browsers, is in line with the design that was approved in Step 3.
Before you begin development, do your research on which operational platforms will be best suited to your site.
Typical ASP language (ASP.NET is a web application framework that allows programmers to build dynamic sites), is more expensive to build and upgrade compared to open PHP language. (PHP – Hypertext Pre-processor is a widely used, general-purpose scripting language designed for web development).
Another option that circumvents development include off-the-shelf website solutions. These are website packages (often DIY solutions) available online.
This type of infrastructure can dramatically lower costs. A Google search will turn up hundreds of options. If you are building an ecommerce site you will need to research electronic payment gateways carefully. These include Paypal (FNB is SA facilitator of local Paypal payments) or Standard Bank’s Mimoney. Decide which is best suited to your business.
Step 5: Testing & Delivery
At this point, the web designer will attend to the final details and test the web site. They will test things such as the complete functionality of forms or other scripts, as well last testing for last minute compatibility issues.
Step 6: Maintenance
Who will update the site? By now, the site should be up and ready. Most web designers will continue to update the information on the site. Some offer maintenance packages based on how often you want to make changes or additions.
You can choose to do changes yourself. A web site driven by a Content Management System (CMS) gives you the ability to edit the content areas of the web site yourself. You are given access to a back-end administrative area, where you can use an online text editor.
Free vs. paid hosting, which is better?
When it comes to hosting your website, there are two kinds of web hosting options:
- A free web host
- Commercial web hosting solution
Free web hosts
If you don’t want your website to disappear get your own domain name. This will protect you to a small degree if your host closes down. If you choose the free web host understand that there will be advertising on your site.
To host your site, the company you have chosen has to bear certain costs – the cost of leasing the web server, the cost of the bandwidth that your site uses, etc. If they’re not earning from advertising, find out how they financing the service before you commit.
Pointers for assessing free web hosting:
- Reliability and speed of access: Find out our reliable the service is and how fast users have with regard to access
- Amount of web space: Think about how much space you will need. Needs vary, depending on how many pictures your pages use, whether you need sound files, video clips, etc.
- File type and size limitations: Some free hosts impose a maximum size on each file you upload
Bandwidth allotment. Many free web hosts impose a limit on the amount of traffic your website can use per day and per month. Check if the host you have chosen has limitation and what they are.
Commercial Web Hosting:
If you decide to go with a service that charges a month fee then it’s vital to check:
- Reliability and speed of access: The web hosting provider should have a redundant connection of at least 1 GBit.
- Data Transfer (Traffic/Bandwidth): Data transfer is the amount of data that is transferred between your site and your visitor’s browser. If the file size of a page on your website is 20KB and the page also makes use of two 10KB images, then every visitor to the page will download 40KB of data. As a rough guide, 1GB of data transfer a month is about 20,000 page views a month.
- Disk space: Disk space ensures your website’s location on the net while data transfer fuels its availability online. With an insufficient data transfer quota your website will not show up online which is why you should be very careful when searching for the right website hosting provider.
- Technical support: The availability of round-the-clock technical support and services are most definitely the most important parts of business websites by many firms.
- SSL (secure server): You will definitely need SSL if you want to collect credit card payments on your site or if you want to run a shopping cart system to conduct your business.
- Server: Servers can crash. You must understand what will happen to your content if the server fails. If you have everything stored on your hard disk (which is the case for many static
- Email: If you want to have email addresses at your own domain, like firstname.lastname@example.org, make sure that the host you choose can provide this package.
How to get a list of web developers in South Africa?
The best route is to rely on word of mouth.
One of the easiest ways to do this is to find websites that you believe to be good and contact their owners for word-of-mouth referrals. There are also a number of directories on the web and you can select a suitable firm through any of the South African Web Site Designer Directories.
Start by browsing through the directories and then select the appropriate specialty and geographical area that suits your needs. Select a few companies and contact them. See what services they offer for what they charge.
Explain your requirements to them and find out exactly what website design, graphics, database programming, search engine optimisation and hosting you need.When you choose a company, be sure to get in to get what ever you have decided on in writing and don’t forget to set deadlines. These must also be in writing
How Do I Start A Transport Or Logistics Business?
An all in one guide to starting a transport and logistics business.
Thinking about starting a transport business?
Forecasts indicate that the demand for freight transport will grow in South Africa by between 200% and 250% over the 15 to 20 years.
Some corridors, (high volume transport routes that connect major centres), such as the corridors between Gauteng and Cape Town (which amount to 50% of all corridor transport) will increase even faster.
Your Free Cheat Sheet: Transport and Logistics Business Cheat Sheet
The scope in the transport and logistics industry is varied – from a one-man show using a small truck to transport goods and offer services, to a fleet of transport vehicles which travel the length and breadth of South Africa’s roads.
Road transportation includes commuter transport from taxis to bus transportation.
It can be a tough industry and there are many threats facing transport businesses but if you get it right, you can build a successful business.
What is covered in this guide:
- How to start your transport and logistics business
- How to get funding for your transport business
- What are the costs involved
- Finding customers and getting transport contracts
- Getting onto suppliers lists
- Buying trucks and employing drivers
- What are the regulations and risks
- Where to find guidance to start your business.
Ready to get going? Click the arrow button to learn how to start your own transport business.
Want To Start A Property Business That Buys Property And Rents It Out?
Information on starting a property renting business.
Start your property rental business using this guide
I would like to start a property business where I purchase the properties and I rent it out, I already have a paid up property that I am renting out but my taxes are too high on the rental income so I am considering starting up a business. Could you advise me on where I can get more information on the requirements to start this and provide some guidance on whether it would be wise to pursue this business?
Before starting any business, it’s important that you’re absolutely clear about why you’re doing it – and that it’s going to be something that excites you, drives you and challenges you in the long-term.
If you’re only considering starting a property investment and management company to try and reduce your taxable income, then I don’t believe this is an appropriate – or a sustainable – solution. You should rather consult a reputable financial adviser about other investment options that would better suit your personal needs.
If owning and managing properties is, however, an opportunity you would like to pursue, I would then recommend that you start off by equipping yourself with a proper understanding of what it actually means to be a landlord. This will help you to make an informed decision about whether or not you want to start this (ad)venture as an entrepreneur.
At a very basic level, here are some of the things you might want to consider to determine if this is the right business for you:
You need to consider the initial cost that you will be incurring when setting up the business, especially since you have a property in your personal capacity.
You will need to transfer the property from your personal capacity into your business and pay transfer fees and transfer costs.
These costs will be calculated based on the current value of the property.
The work and planning
No matter whether you’re a residential or commercial landlord, property management requires a great deal of work and planning. Remember you will be responsible for all aspects of the property: From purchasing it to maintaining it on a day-to-day basis.
This involves everything from transfer to managing the monthly utility bills, all the way through to replacing the geyser when it bursts and ensuring your tenants behave appropriately in the building. You would also need to source your tenants and ensure that they pay you on time.
All by yourself
From a start-up perspective, you would probably need to do all of this yourself in the beginning. As such, you would need to work to build up your own database of reputable suppliers: Plumbers, electricians and handymen. It’s important that you find experienced, qualified suppliers that you can trust, and who will be able to deliver on time and cost-effectively.
This can be a very time consuming process. Also consider that you would need to be on hand to facilitate all of this work: Arranging the call-out with the supplier and the tenant; overseeing the work delivered; paying the supplier etc.
Business owner development
Above and beyond that, you’re then going to need to develop yourself as a business owner. You will need to equip yourself with the skills and knowledge required to lead and manage this business in order to make it both sustainable and profitable. This will require a significant investment from you: Time, effort and money. The more you commit to this journey of personal and professional development, the better your chances of success.
If you can picture yourself doing – and enjoying – all of the above, it’s then equally important to consider if this is a viable opportunity.
The greatest barrier to entry in this sector for you as an entrepreneur is probably going to be finance. You need to be conscious of this from the outset.
- Do you already have access to the funds you need to purchase the properties you are going to rent out?
- If not, what are your plans to secure this funding? And what are the returns you are expecting?
- Also consider the funding of the business itself. How will you finance this, especially during the first year?
My recommendation here is to take the time to do your homework – and the maths. While this could be a business opportunity, it might not be something that will be possible for you to do on your own.
If you have a feasible plan regarding the above, you then need to start working on developing a model for this business – as well as a strategy and plan. All of these will require research on your behalf: From reading Entrepreneur to accessing websites, possibly visiting walk-in centres etc.
This will include unpacking the actual opportunity itself – and determining if there really is a demand for your service offering.
Please note that the above are thinking or “trigger-points” – listed simply to give you an idea of some of the things you need to consider, as well as the mindset you will potentially need to adopt as an entrepreneur. Your response to them should give you a good sense of if this is the path you wish to walk.
Remember that entrepreneurship is a journey – and every day on this road is a learning opportunity. If it is for you, embrace it whole-heartedly, don’t be afraid of failure and be sure to seek out the assistance available to you.
How Do I Start A Child Services Business?
The ultimate guide to starting a child care or child services business.
Is It for You?
Does children’s laughter sound like music to your ears? Do you enjoy the idea of six kids chaotically crawling at your feet at any given moment? Then read on for your perfect business.
The number of working parents – including single-parent families and families with both parents employed is climbing, creating an ever-growing need for quality child care. That need is creating a tremendous entrepreneurial opportunity for people who love children and want to build a business caring for them.
Related: Free sample business plans here
Child-care services range from small home-based operations to large commercial centers and can be started with a small investment.
You can stay very small, essentially just creating a job for yourself, or you can grow into a substantial enterprise with potentially millions of Rands a year in revenue.
You also have a tremendous amount of flexibility when it comes to the exact services you choose to offer. You may limit your clientele to children in certain age groups or tailor your operating hours to meet the needs of a particular market segment. You may or may not want to provide transportation between your center and the children’s homes and/or schools. You may want to take the children on field trips.
As an alternative to child care, you may want to consider a business that focuses solely on providing transportation for children. Of course, the basic work you’ll be doing − caring for someone else’s children − bears a tremendous amount of responsibility and requires a serious commitment. When the children are in your custody, you are responsible for their safety and well-being.
You will also play a key role in their overall development and may well be someone they’ll remember their entire lives.
Filling an important need
One of the biggest challenges facing South African families today is caring for their children while the parents work. According to Stats SA 39% of women head households in South Africa. A higher percent than ever of married-couple families, both husband and wife work outside the home. The labor-force participation of women in their childbearing years continues to expand. As the number of working parents rises, so will the demand for child care.
Another issue that has an impact on child-care issues is the new, 24-hour global market. Occupations with a high number of employees working nights and weekends − such as janitorial, hospitality, customer service and technical support − are experiencing substantial growth, and workers in these fields find obtaining quality child care an even greater challenge than their 9-to-5 counterparts. For many working parents, there is no single solution to their child-care needs.
More than a third use more than one option, such as day-care centres part of the time or full time or use domestic staff to provide care for children who don’t attend a daycare centre.
Do you have what it takes?
What are the characteristics of a person who would do well operating a child-care. The person needs to be energetic, business-minded, a competent leader, have a pleasant personality, be professional, be willing to take calculated risks, be a good role model, have strong financial resources, be consistent in expectations of the staff, and be consistent in the delivery of service.
A child-care business can easily be started in your home with just a few weeks of planning and a modest amount of start-up cash. A commercially located centre takes a greater investment of time, energy and money. The size and type of business you choose will depend on your start-up resources and goals for the future.
Many child-care providers are satisfied with a one-person operation in their home that generates a comfortable income while allowing them to do work they enjoy (and possibly even care for their own children). Others may start at home and eventually move to a commercial site as the business grows. Still others begin in commercial locations and are either content with one site or have plans to expand.
The Beginning Stages
As you complete your startup efforts, use this checklist (and tailor it to your own needs) to make sure you’ve covered all your bases before you open your doors.
- Type of centre: Will you operate from your home or a commercial location?
- Licensing: What licenses are you required to have and from which agencies? What are the requirements, costs and lead times?
- Training and certification: What types of training and/or certification do you need?
- Market: What are the child-care needs of your community?
- Location: Choose a site that is appropriate and affordable.
- Legal requirements: Check on zoning and any other legal issues. (See regulations later on in the story)
- Financial issues: Estimate your start-up costs and identify the source(s) of your start-up funds.
- Health and safety issues: Plan for accident and illness prevention, and develop emergency procedures. See regulations later on in the story)
- Programs: Develop an appropriate schedule of activities for the children.
- Equipment: What do you need to adequately equip your centre, where will you get it, and how much will it cost?
- Insurance: What coverage do you need to adequately protect yourself and the children in your care?
- Staffing: If you plan to hire people, know the required staff-to-child ratios and develop your human resources policies.
- Links: What community and professional resources are available to you?
Conducting Market Research
Prime candidates who need full-time child care are parents with infants to 5-year-olds. Parents with children over 5 are good prospects for after-school care programs. The market segments most likely to use child-care services are dual-income families and single-parent households in most income brackets.
A number of government programs help low-income families pay for child care so the adults can stay in the work force.
Within this very broad market is the narrower group of clients you’ll serve. Use market research to figure out who these people are and how you can best attract them to your center. Lois M. says the primary market at four of her six locations is parents who are upper-income working professionals; the other two centers serve a number of middle-income families as well as those being subsidised by public funds.
Janet H. says about half her clientele consists of dual-income families, and the other half is single mothers who receive government assistance as they work through programs designed to get them off welfare. The goal of market research is to identify your market, find out where it is, and develop a strategy to communicate with prospective customers in a way that will convince them to bring their children to you.
When Lois M. opened her first centre, her demographic research revealed that there were 9,000 children from infant to 5 years old within a 5-mile radius of the site; half the pre-school children in the area were in day care of some sort because their mothers (or both parents) worked; and the number of households in the area was expected to double within a decade. Contained in that 5-km radius were six child-care centres serving approximately 800 children.
Brenda B.’s research wasn’t as sophisticated. Living in a small town, she knows just about everyone and is well aware of the lack of child-care services.
“There’s such a need for day care,” she says. “I go through periods where I’ll get as many as five calls a week from parents needing care, and I don’t have room for them. I’ve had families on my waiting list for up to two years.”
What licenses do you need to start a pre-school?
Early Childhood Development Centre have to be registered with the Department of Social Development (DSD). This registration can be done through your local branch of the DSD.
The DSD suggest that you follow the following steps:
- Complete an application form for registration as a place of care. You can get the application form on the web.
In order to apply you must submit a weekly menu and daily programme and then submit the following information:
- A building plan/hand drawn sketches of building
- A copy of constitution, signed and dated (only if you also require funding)
- Service/Business Plan (for application for funding
- Financial report of the past year (for funding purposes)
- Contract with the owner of the building (lease – for funding purposes)
Once the documentation is approved, you will have to undergo an assessment from the Local Authority on structural and health requirements
What types of child-care services can be offered
Before you open your doors to the first child, you should decide on the services you’ll provide and the policies that will guide your operation. To simply say you’re going to “take care of children” is woefully inadequate.
- How many children?
- What ages?
- What hours?
- Will you provide food or ask their parents to?
- What activities will you offer?
- What sort of price and payment policies will you have?
- And the list goes on.
Your first step is to check with the appropriate regulatory agencies, which in South Africa is your local municipality and the local division of the Health Department. They will explain to you what’s involved in providing particular services.
For example, each province has its own guidelines for the maximum number of children and maximum number in each age group in a family child-care facility. Municipalities in various regions also have guidelines regarding caregivers. There will likely be other requirements and restrictions, depending on the type of facility you run.
Decide what services to offer based on your own preferences and what your market research says your community needs. Your choices include:
- Full-time care during traditional weekday hours
- After-school care
- Non-traditional hours (very early mornings, evenings, overnight care, weekdays and/or weekends)
- Drop-in or on-demand care, either during traditional or non-traditional hours
- Part-time care
- Parents’ night out (weekend evening care)
- Age-based care
How to find the right location for a child-care business?
If you’re going to open a center on a commercial site, it makes sense to locate your facility close to your target market. Some parents may prefer a center close to home; others may choose a center close to their workplace. In the latter case, parents get to enjoy more time with their children during their morning and evening commutes, as well as the opportunity to spend time with them during the course of the day, perhaps for lunch or special programs.
Some site suggestions to consider include:
- A facility within or adjacent to a residential neighbourhood or near a school
- A facility in a shopping centre where parents with children are likely to pass by
- Sharing a facility with other community organisations
- Office and planned light-industrial parks with a sizable work force.
Opening a child-care centre at home
If you’re going to open a child-care centre at home, discuss your plans with family members and neighbours before you open. Younger children may resent other children coming into your home and changing their lifestyle.
Older children − especially teenagers who will need to be told what’s expected of them and what they can expect as your business gets off the ground. Spouses may not completely understand the time commitment involved in this business, so talk about things in detail well in advance of bringing the first client in.
You may find that your extended family and friends don’t really understand what’s involved in a professional child-care business and may think that, since you’re at home during the day, you’re “not really working” or you’re “just baby-sitting.”
Talk to your neighbours about the impact your business will have on them in terms of traffic (as parents drop off and pick up their children) and noise (think about the decibel levels five or six children can generate when playing). Let them know what steps you’ll take to keep any irritation or inconvenience to a minimum, and reassure them that they should feel free to contact you with any concerns or questions.
Some family child-care centre operators have certain rooms of their homes designated for their business; others use their entire homes. Your decision will be based on your state guidelines and personal preferences.
Brenda B. has a playroom for the children, but they are not restricted to that area; she says she pretty much uses her entire house and her large, fenced backyard for her business. Sherri Ax’s house in Durban has a living room that serves as the primary child-care area.
How much cash is needed to start a child care business
So what do you need in the way of cash and available credit to open your doors? Depending on what you already own, the services you want to offer and whether you’ll be home-based or in a commercial location, that number could range from a few hundred to tens of thousands of Rands.
As you consider your own situation, don’t pull a startup number out of the air; use your business plan to calculate how much you need to start your ideal operation, and then figure out how much you have. If you have all the cash you need, you’re very fortunate. If you don’t, you need to start playing with the numbers and deciding what you can do without.
Start-up costs can be low
Many of the child-care entrepreneurs we talked with used their own personal savings and equipment they already owned to start their businesses. Because the startup costs for a family child-care business are relatively low, you’ll find traditional financing difficult to obtain − banks and other lenders would much rather lend amounts much larger than you’ll need and are likely to be able to qualify for. A commercially located centre will take a more substantial investment and would likely qualify for a bank loan.
Brenda B. estimates that she initially spent R3000 to R4000 on equipment for her family child-care centre. She shopped at second hand shops and accepted donations of used toys and other items from friends and acquaintances.
Janet H. spent considerably more – about R40 000 – to set up her family child-care centre because she remodeled her garage to serve as the primary room for her business as well as added a bathroom for the children. When she opened her first commercial location, she used a combination of personal savings and credit cards to pay the expenses. By the time she opened her second location, she was able to qualify for a commercial loan.
Lois M. took out a second bond on her home to get the R105 000 she needed to adequately equip her commercial centre when she opened. Yvette B. in Miami, put R250 000 of personal savings into her children’s transportation service. Deborah B.’s start-up costs Johannesburg, were in the range of R40 000 to R50 000, which she funded primarily with personal credit cards.
As you’re putting together your financial plan, consider these sources of startup funds:
- Your own resources. Do a thorough inventory of your assets. People generally have more assets than they immediately realise. This could include savings accounts, equity in property, insurance policies, unit trusts, and other investments. You may opt to sell assets for cash or use them as collateral for a loan. Take a
- Look, too, at your personal line of credit. most of the equipment you’ll need is available through retail stores that accept credit cards.
- Friends and family. The next step after gathering your own resources is to approach friends and relatives who believe in you and want to help you succeed. Be cautious with these arrangements; no matter how close you are, present yourself professionally, put everything in writing, and be sure the individuals you approach can afford to take the risk of investing in your business.
- Partners. Though most family child-care centres are owned by just one person, you may want to consider using the “strength in numbers” principle and look around for someone to team up with you in your venture. You may choose someone who has financial resources and wants to work side by side with you in the business. Or you may find someone who has money to invest but no interest in doing the actual work. Be sure to create a written partnership agreement that clearly defines your respective responsibilities and obligations.
Take advantage of provincial and national government grants and funding programs designed to support small businesses. Women, minorities should check out niche financing possibilities designed to help these groups get into business.
Regulations, legal and licences
You have to register with the local municipality and apply for a health permit. Contact the Department of Health who will refer you to the correct area that you are zoned for and provide. Once you have selected a venue you have to register with the local municipality who in turn follows the regulations laid down by the Department of Social Development in accordance with the Childcare Act, 1983 ( Act No 74 of 1983).
When approving an application for registration, the Council can impose further conditions and restrictions as it sees fit. Once the application for registration has been approved, the Council will issue a Certificate which will:
- State the name of the person to whom it is issued
- Describe the premises in respect of which the application was approved
- Will specify any conditions or restrictions which it may have imposed
- Will state the period for which the premises will be registered.
The crèche or crèche-cum-nursery school has to comply with health by-laws to the to the satisfaction of the Medical Officer of Health who issues an Environmental Health Permit which every day centre or crèche should have. Setting up a crèche or day care centre regulations state that there should be:
Office, staff room and sick-bay
If there are more than 30 children are cared for on the premises, provision should be made for a separate office large enough to be divided into a sick bay to accommodate at least two children, as well as a staff room. These can be combined
Indoor Play Area
- There must be an indoor play area covering a minimum floor space of 1,8m² per child to be used for play, meals and rest.
- Cots and mattresses utilised for sleeping purposes by children must be arranged so that there shall be a minimum of 50cm space between the cots or mattresses.
- The kitchen must have suitable cooking and washing facilities. Kitchen has to be separate from the play area and not be accessible to the play area or the children
- There must be adequate natural lighting and ventilation
- Wall surfaces should have a smooth finish and should be painted with a washable paint
There must be one toilet and one hand washing facility for every 20 or less children under 5 years of age, irrespective of sex.
- Or one toilet and hand washing facility for every 20 or less children above the age of 5 years, separate for each sex.
- Separate toilet facilities must be provided for the staff as set out in the National Building Regulations.
- There must be a supply of hot and cold running potable water at the wash-hand basins, or if no running water is available, a minimum of 25 litres of potable water, stored in a hygienically clean container.
- If potties are used they must be emptied, cleaned and disinfected with a disinfectant immediately after being used and stored in a suitable place
Outdoor play area
If you have an outdoor play area it must provide at least 2 m² per child. The play area must have shady areas or other safe surfaces, be fenced / walled and have approved lockable or child-proof gates and should be free of excavations and dangerous steps and levels.
The crèche must keep a health register.
What licences are required and what legal, health and safety steps that must be taken?
A safe playground is crucial
Operating a safe playground for children to enjoy means that you have to follow the regulations as stipulated by the local council. You must also take advice from your insurer and your lawyer.
It is important to buy liability insurance, including accident and equipment liability. Be sure to get a detailed list of insurer’s requirements and follow those to the letter. When purchasing play structures, make sure that they include warranties.
Comply with local council
Once the playground is built, you will have to comply with health by-laws to the satisfaction of the Medical Officer of Health who issues an Environmental Health Permit for the playground. You will have to undergo an assessment from the Local Authority on structural requirements before you can open the business.
Health and safety bylaws apply
In terms of the playground, the business has to comply with health by-laws to the satisfaction of the Medical Officer of Health who issues an Environmental Health Permit for the play area. You will have to undergo an assessment from the Local Authority on structural requirements before you can open the business. Contact the DoH and request the details of the local authority in your area
Getting your own licences is difficult
If the business is an independent operation, it’s harder. Your first step is to check with the appropriate regulatory agencies, which in South Africa is your local municipality and the Department of Health. Each municipal area has different by-laws, which is why it is so difficult to be specific in terms of licence requirements. The local council will explain to you which licences are required in providing particular services.
Food and liquor compliance
To serve food, a Certificate of Compliance for Food Preparation is required. If you sell any form of alcoholic beverage, you have to apply for a liquor licence.
Get legal advice
Consider consulting an attorney to ensure that you have all the correct licences. Browse through the Entrepreneur legal directory for options.
How to set prices and receive payments for a child care business?
The fees you charge will provide the financial base for your company and your income. They need to be competitive in your market, reasonable and affordable for the parents, and also fair to you. You need to consider a variety of issues, including your costs, the profit you want to make, the going rates in your area and what the families you’re targeting can afford. Setting your rates, explaining–and often justifying–them to parents and then collecting the money are all part of being in the child-care business.
Since you’ll be offering a carefully planned curriculum that is far more than a mere baby-sitting service, you are justified in establishing a fee structure similar in design to a private school. A one-time enrolment charge of half a week’s tuition will hardly raise an eyebrow, but it will compensate you for the cost in time, paperwork and special attention each entrant needs.
Calculating how much to charge for space in your centre will be based primarily on three variables:
- Labour and materials (or supplies)
A fourth factor uncommon to most businesses but significant for a child-care centre the limit to the number of children you can accommodate. In most fields, if your business grows, you just keep hiring employees to serve the increasing number of customers. But in child care, municipal by-laws and practicality limit the number of children you can accept, putting a lid on the income potential of your business. To overcome this, successful child-care centre operators often open more locations in nearby areas to increase their client base and income.
Forms of Payment
You’ll receive payments by check and cash, and you may also want to set up a merchant account so you can accept credit cards or electronic transfers. Check with your bank or the different credit card companies for information on accepting credit cards. Many child-care and transportation service providers find that automatically debiting parents’ credit cards is the easiest way to obtain payment. “A debt order every month is the easiest way to get your money,” says Yvette B. “There are discount fees involved, but its well worth it.”
In most parts of South Africa, the demand for quality child care is so high that marketing your business will be relatively easy. In fact, many of the providers we talked to for this story − especially the home-based centres − do little or no marketing because they’re established, with strong reputations and waiting lists.
But every business needs a marketing plan, and yours is no exception. All your marketing materials should be professional and letter-perfect. Consider hiring a graphic designer and/or professional writer to help you with your marketing package. If they have children, you may be able to negotiate their fees in barter.
Keep these questions in mind as you form your marketing plan:
- Who are your potential customers?
- How many of them are there?
- Where are they located?
- What are they currently doing for child care?
- Can you offer them anything they’re not getting now?
- How can you persuade them to bring their children to you?
- Exactly what services do you offer?
- How do you compare with your competitors?
- What kind of image do you want to project?
The goal of your marketing plan should be to convey your existence and the quality of your service to prospective customers, ideally using a multifaceted approach. The child-care center operators we talked with used a variety of marketing methods, from simple word-of-mouth to more sophisticated techniques.
Ask new clients how they found out about you. Make a note of their answers and what kinds of businesses they represent (how many children they could potentially refer to your business). This will let you know how well your various marketing efforts are working. You can then decide to increase certain programs and eliminate those that aren’t working.
How many children can a day-care centre accommodate before registering the business?
If there are five children or less you do not need to register the business. However, once there are six or more children you have to register.
When should a day-care centre be registered?
“You only need to register a day-care centre if there are six or more children,” says community development officer, Tinyiko Shibambu at the Department of Social Development in Johannesburg. “First you have to register the business as an NPO (Non Profit Organisation). Once you have a NPO certificate, then you can register the day-care centre with the Department of Social Development,” advises Shibambu. Contact the Department of Social Development for details.
Procedure to register an NPO
There is a specific registration process to follow in order to register an NPO
In a crèche scenario, how many caregivers should there be for the number of children in a class?
According to the Department of Social Welfare, to operate a basic crèche you must have a minimum of three staff members per class. In South African childcare centres, the staff to child ratio for 0-2-year-olds in an ideal situation is one caregiver to every five children, 1:5. For 2-3-year-olds, the ratio is 1:10. However, according to the Department of Social Welfare, to operate a basic crèche you must have a minimum of three staff members per class and you can employ more if the business can afford it. However, it is best to contact the municipal office in your area and check the regulations as each municipality has different regulations
What goes into effectively managing a child-care business
The high rate of attrition in the child-care business is driven in large part by the fact that many caregivers focus almost exclusively on nurturing and caring for the children in their charge, and neglect the financial and management sides of their operations. But whether your goal is a small, family child-care centre or to build a chain of commercial locations, you must deal with administration and management issues if your business is going to survive. If you plan ahead, that won’t be hard.
Set up your financial record-keeping system
From the outset in a way that will provide you with the information you need to monitor your profitability and handle your tax payments to SARS. You may want to hire a consultant or an accountant who specializes in small businesses to help you at first; this small investment could save you a substantial amount of time and money in the long run.
Spend time marketing and doing admin
Expect to spend a significant amount of time on management, marketing and administration. If you have employees, they need to be trained and supervised. Although the demand for child care is high, parents won’t be able to find you if you don’t market your service.
And keeping up with administrative details–paying accounts, buying supplies, doing budgets and forecasts, meeting ongoing licensing requirements, facility maintenance, etc.− is a never-ending process.
Choose staff very carefully
The staff that you employ must be children-friendly. Conduct thorough background checks on all potential staff.
Ready to Take the Next Step?
You will need to create a business plan to get you going.
Here is a Free Sample Business Plan.
Capital is essential to starting up your business. You can self fund, or alternatively seek outside funding to assist you in starting up your business.
Here are New Ways SMEs Can Find Funding.
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